It is a great pleasure to address such a distinguished group of
people today. The initiative to start the Global Alliance for
Banking on Values could hardly be more timely. It comes during a
time where the role of banks - for good or bad - is higher on the
public agenda than ever before. I would like to thank Triodos Bank,
Shore Bank and BRAC for their kind invitation to contribute to this
crucial debate. And I welcome the opportunity to share some
thoughts, not only from the perspective of a previous banker, but
specifically from my experience over the last three years as a
member of the UN Advisors Group on Inclusive Financial Sectors.

I don't intend to dwell for too long on the financial crisis,
given that I'm talking to a room of financial experts. Having
said that, only now we are starting to have some insight in the
real extent of the consequences of the last months. In any
case, one thing is clear - the core values of banking; trust,
building sustainable and long-term relationships, and offering
products that add real value, are more relevant than ever. And
neglecting these values seems to be at the heart of the causes for
the crisis.

Over the last few months it has become more evident how
important it is to have and develop a sound inclusive financial
system in a country that, not only promotes growth and reduces
income inequality, but also gives its customers financial services
they really need and can afford. Because with it, we can safeguard
our people's savings, and protect the financial system as a
whole.

I understand the Global Alliance of Banking on Values has
ambitious goals; to set inspiring examples of what banking can
really do. Examples that will encourage the expansion of the
boundaries of mainstream finance and contribute to social
innovation in the financial sector. To combine strength, capacities
and resources to tackle the global challenges facing people and the
planet, and to drive a more responsible and sustainable
economy.

Financial institutions can be catalysts of change. In the
past three years I have seen the power of microfinance banks to
change people's lives, and to benefit communities and societies as
a whole. I am delighted to see that some of the leading
microfinance banks are founding members of this Alliance.

Research tells us time and again that a sound financial sector
is an essential part of the development process. Financial
development, and improving access to finance, accelerates economic
growth, reduces poverty and income inequality.

Access to a wide variety of financial services and products -
from loans and savings, to insurance products and remittances can
be a powerful tool to generate income, build capital and protect
people against risks. However, over 2 billion people remain
excluded from the financial services that we take for granted. The
possibility to save in a savings account for example, equally as
important as access to credits, has also been lagging. Only 20% of
the world population has access to a savings account against more
than 90% in the OECD countries. Needless to say, that microfinance
institutions that offered saving products to their clients are
weathering this crisis much better than the ones that are not
deposit based like the case of Acleda in Cambodia.

When we talk about financial inclusion, one issue is key. While
access to financial services is crucial, it requires informed
consumers who understand the obligation they are undertaking and
have the ability to fulfil it. If people are borrowing money,
they depend on a lender treating them fairly, with clear and
transparent loan terms. The current global financial crisis
is in part due to the absence of these factors, and to overzealous
marketing of inappropriate loan products to vulnerable consumers,
many of whom did not fully understand what they were getting
themselves into. There's an appropriate role for the
government in establishing "light touch" but adequate, market
regulation, and establishing and promoting effective programs that
inform consumers about financial services: financial education. And
it is the role of banks and microfinance institutions to have
consumer protection and transparency written into the DNA of their
organization.

I was in Paraguay last year when somebody from an MFI said
something I will never forget. He said: "It is not about increasing
market share and trying to get as many products sold to the
customers out there, but it is about giving the product that the
consumer needs and that they can afford. Knowing your customer, not
on a scoring basis, but really knowing that this client has the
capacity to pay back his loan."

There are numerous examples of this kind of responsible
stewardship elsewhere. One of the members of this Global Alliance,
Mr. Solorzano from Banex in Nicaragua, told me last year that Banex
has installed an ombudsman who deals with client complaints as part
of a programme for client protection.

This is a core value that I am sure is a key principle for the
founding members of this Alliance. And I sincerely hope that
financial education will be on your agenda as well.

The times we are living in, and the challenges we face, require
integrated solutions. Trying to alleviate poverty will not work
unless we address climate change, the need for clean energy, clean
drinking water, sanitation and sufficient and healthy food.

Banks have a pivotal role to play in this. I think part of the
value of this Alliance lies in fostering shared learning; for
instance, microfinance banks can learn more about environmental
finance and work on building solutions for financing rural solar
energy, small hydro power, solutions for clean drinking water and
sanitation.

Two billion people globally do not have access to finance. They
also do not have access to electricity, oil or gas to cook food and
for a daily living. This perpetuates the poverty trap and
undermines attempts to achieve the UN Millennium Development Goals
while putting pressure on economically-important ecosystems such as
forest for fuel and charcoal. This is a huge challenge, but can
also be a business opportunity to build alternative energy systems
and healthy environments. I think microfinance banks can play a
huge role here.

BRAC in Bangladesh, also a member of this Alliance, promotes
solar energy for rural households who live in the 50,000 villages
outside of the national power grid. Through microenterprise loans,
villagers choose from a selection of home packages that can provide
up to four hours of power each night and are capable of running a
couple of light bulbs and mobile phone chargers. To date BRAC has
successfully installed almost 37,000 solar panels bringing
sustainable energy to 180,000 people living in remote rural
areas.

We have also seen some strong business cases using microfinance
for sanitation and waste management activities. Showing that
adequate water and sanitation to people not only translates in
environmental and health gains, but it can also yield economic
gains. SEWA in Gujarat, India, for example, has formed a for-profit
company with women's Self Help Groups, by training them through an
external agency to be barefoot engineers. The skills have enabled
the women to not only provide services for the water and sanitation
needs of the villagers but also to address the broader
infrastructure needs they may have.

I can cite similar examples of microfinance involved with water
irrigation systems, healthy and efficient cooking stoves, water
filtering systems, etc.

Banks in developed countries too, have much to learn from
microfinance banks about how to efficiently and effectively provide
microfinance. Even now, in the US as well as Western Europe, there
is a significant group of underserved people who want to start
small businesses but can't access the finance to do it.

So what is the role of governments and regulators in all of
this? In my work for the UN Advisors Group on Inclusive Financial
Sectors over the last three years, we talked to regulators and
governments of many different countries. A subject that came
up consistently was whether there should be a ceiling on interest
rates for microcredits. Our argument would be, and this has been
proven in many countries, that market-forces like competition drive
down interest rates over time. If governments chose to regulate
interest rates and set ceilings, they limit commercial growth of
microfinance institutions, stifle competition and increased
efficiency and ultimately restrict access to finance for more
people.

However, this argument is more difficult to make in the
exceptional cases where microfinance institutions see profit as an
end in itself rather than a means to an end. It is hard to explain
why shareholders of a microfinance institution should earn
extraordinary profits at the expense of poor people paying
extremely high interest rates. In the end this is about balance.
Balance between all financial institutions' stakeholders is
essential- from clients and shareholders to co-workers and
management.

In the current climate, the roles of the banks in this Alliance
could be to set an example for the financial industry as a whole to
follow; to show how this balance between stakeholders and the
balance between people, planet and profit can work as a successful
business model.

Ladies and gentlemen,

We need to go back to basics. Back to the traditional banking
activity of acting as an intermediary between the saver and the
borrower, back to a strong relationship between the customers and
the financial institution that serves them, and back to a thorough
assessment of how much a customer can really handle as a loan,
giving him the opportunity to improve his life and give back his
dignity.

We also need banks that drive the social and environmental
change the world needs to meet the greatest challenges of our time.
I hope this group of frontrunners will play a leading role in that
task and that many will join you in your mission. I wish you all
the wisdom and vision to make this Global Alliance into a starting
point for connecting values to banking.